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0.5% cybersecurity levy: Nigerians cry for help

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Tinubu is not running a serious govt- Adebayo

The policy from the Central Bank of Nigeria (CBN) directing all commercial, merchant, non-interest and payment service banks, other financial institutions, mobile money operators and payment service providers to deduct from all electronic transactions of customers 0.5% of every transaction as cybersecurity levy has caused chaos for citizens.

 

A CBN circular on May 6, read that the cybersecurity “levy shall be applied at the point of electronic transfer origination, then deducted and remitted by the financial institution. The deducted amount shall be reflected in the customer’s account with the narration cybersecurity levy.

 

“Deductions shall commence within two weeks from the date of this circular for all financial institutions and the monthly remittance of the levies collected in bulk to the NCF (National Cybersecurity Fund) account demicilid at the CBN by the 5th business day of every subsequent month.”

 

The circular added that the new 0.5% cybersecurity levy to be deducted by banks from ever electronic transaction of all banks, mobile money operators and payment service providers’s customers shall be for the office of the National Security Adviser.

 

CBN added that “failure to remit the levy is an offense and is liable on conviction to a fine of not less than 2% of the annual turnover of the defaulting business, amongst others”.

 

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The new policy has been greeted with disgust by Nigerians, economic and financial experts. While some Nigerians described the new tax as Tinubu government’s insensitivity to economic hardship citizens face, economic and financial experts said the Tinubu-led government and the Central Bank of Nigeria have to suspend the new levy for economic progress.

 

A businessman and X (formerly Twitter) influencer, Morris Monye, asked the purpose of the cybersecurity levy. Monye said, “The CBN has directed all banks to impose a 0.5% cybersecurity levy on all transactions. The money is to be remitted to the office of the National Security Adviser. Why please? What’s the purpose?”

 

Financial expert and analyst, Kalu Aja said the decision of the federal government and the Central Bank of Nigeria to continuously increase taxes amidst economic downtime is counterproductive. He said the idea of putting exemptions in tax policies to excuse for the new cybersecurity tax at a time the country is faced with economic hardship will lead to unemployment and more hardship.

 

Re-echoing the words of President Tinubu on increased taxation, Kalu Aja said, “During times of economic weaknesses, increasing taxation is counterproductive, high taxes invite possible economic contradiction and higher unemployment.”

 

Also, Professor Ndubuisi Ekekwe, Chairman of Tekedia Capital said the new cybersecurity levy by CBn showed detachment of the elite and policy makers of Nigeria from the reality of Nigerians.

 

Professor Ekekwe, a Harvard Business Review writer, said CBN’s circular which read in part, “In a move said to be aimed at fortifying Nigeria’s digital defenses, the Central Bank of Nigeria (CBN) has issued a directive mandating financial institutions to enact a cybersecurity levy. This levy, amounting to 0.5% of the value of all electronic transactions, is intended to boost the National Cyber Security Fund administered by the Office of the National Security Adviser (NSA)” lacked what is needed to grow the nation’s economy.

 

Ndubuisi said, “We’re already paying NITDA Levy (information technology), ITF (training), TETFUND (education), and now Cybersecurity Levy, besides other auxiliary fees. I expect by 2027 for a Federal Labour Levy to be enacted to help pay salaries of workers.

 

“Nigeria does not need this playbook. What we need is to GROW the economy so that corporate taxes can take care of these auxiliary fees. America waived online sales taxes for more than a decade to grow the e-commerce sector, knowing that when companies like Amazon ascend, all the lost taxes would be made up.”

 

He added, “In other words, there is a clear plan with a big picture. We need to learn something because this piecemeal disparate approach of charging this and that, as fees, on people’s properties, seems non-optimal in my view. Taking 0.5% is a lot of money, and it makes the Office of the National Security Adviser (NSA) the most investable fintech in Nigeria if it is open for investments.”